Robinson-Patman Act

4) Describe what is meant by the term " bait and switch" Is this legal or illegal retailing tool?

5) What is deceitful diversion of patronage? Comment of its legality?

7) If a retail salesperson makes a misleading statement to a customer, can the retailer be held liable, even if the retailer instructed the salesperson never to make such statements?

9) How could two-way exclusive dealing arrangements be harmful to the consumer and competition?

Solution Preview

) Why should a retailer be familiar with the Robinson-Patman Act?
A retailer should be familiar with the act because it pertains to retail trade and the retailer should not enter into any agreement with manufacturer in violation of the provisions of the act.
The Robinson-Patman Act is actually an amendment to the Clayton Act. It says that it shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States..."
Congress believed that large firms could dominate markets through predation and other forms of economic warfare directed against smaller firms, and felt that "power buyers" such as large retailers could use their market power to extract price concessions from manufacturers and other sellers that were unavailable to their smaller competitors.
The law was enacted in 1936 amid growing concerns that large retail firms were using their market power to exact special deals from manufacturers not made available to small, independent businesses

4) Describe what is meant by the term " bait and switch" Is this legal or illegal retailing tool?
Bait and switch tactics involve the advertisement of a product on television or such other mass media at an extraordinary low price. Upon visiting the premises of the retailer, the consumer finds that the seller has limited or no stock of the product advertised. Instead the seller diverts the attention of the consumer and tries to sell other high priced products. The trick is to draw the consumer to the shop using the low price advertisements as "bait" and "switch" over to other high priced products. This practice has been common among car dealers, electronics retailers and furniture sellers etc. In some states it is considered unlawful to "bait and switch" and comes under the statutes such as FDUTPA, while other states merely categorize it under fraud.
A typical bait and switch case could be ...

Solution Summary

How could two-way exclusive dealing arrangements be harmful to the consumer and competition?